Back in the saddle again, cattle producers from the Dakotas, Wyoming, Saskatchewan, Manitoba and Wisconsin are making plans to process their own beef.
Efforts earlier in the year to create a farmer co-operative able to breed, feed, slaughter and market their own animals were thrown after organizers failed to round up enough investors. Northern Plains Premium Beef then made a share offering of 250,000 units that failed to generate even half of the needed investment by the time the offering closed June 1.
The original plan for a beef slaughter plant and feedlot plan designed to process 300,000 animals annually would have cost investors $40 million.
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“It was a hard winter for many producers. They were more concerned about surviving the winter than they were about marketing in the future. I think that seriously cut into the project,” said Ryan Taylor, a North Dakota rancher.
Other factors cited in the failure included a lack of a firm location for the slaughter plant and the large size of the project.
Attendance at a Northern Plains meeting in Bismarck, N.D., Dec. 3 -4, attracted 300 interested producers from five states, Saskatchewan and Manitoba.
“It was decided a new business plan will be made. We will be downsizing our plans, setting out to put together a new marketing plan and making a new share offering as early as February. We got a real sense of enthusiasm from the meeting,” said John Lee Njos, chair of the board of directors and Rhame, N.D., rancher.
Soon Northern Plains will test the producer equity market again with a new plan, a single plant with an annual kill of 150,000 animals and arrangements with several feedlots in the region for custom feeding to specifications of the organization. A location for the plant will be announced in advance of the next share offering. Potential sites are McLean County N.D., Rapid City, S.D., the area of Ellendale, N.D., and Aberdeen, S.D.
Ways to raise money
Share prices will again be about $100, say board members. Other options for the board to raise money by leveraging against producer equity include borrowing or issuing bonds in the project.
“Cattle producers deserve to be paid on the basis of the retail price of their product. If the retail market is paying a premium for certain criteria in an animal and we can deliver it, we should be paid for it. So we have to take slaughter and marketing into our own hands,” said Dean Meyer, a rancher and former chair of Northern Plains.
Saskatchewan and Manitoba cattle producers played a significant role in the first equity drive with 52 and 219 members respectively. North Dakota led the way with 968 members, South Dakota followed with 463, Minnesota 237 and others from Montana, Wyoming, Nebraska and Iowa.
